Cryptos Rallied in May, Before Being Pushed Down by Regulatory Uncertainty

  • Most cryptocurrencies started May surging, but soon started falling thanks to regulatory uncertainty.
  • Some of the top cryptos launched their mainnet this month, which some analysts see as a bullish development.

Crypto markets were driven largely by sentiment in May, resulting in sharp gains during the start of the month and a robust decline over the coming weeks.

While many top cryptos followed a similar pattern of rallying and then suffering significant losses, these digital assets were in several cases impacted by their own unique variables, which for example include the May 15 hard fork of Bitcoin Cash and the anticipation surrounding the release of the EOS mainnet.

The overall cryptocurrency market climbed 12.7 percent between May 1 and 6, before falling 31 percent during the rest of the month, according to the MVIS CryptoCompare Digital Assets 100 Index (MVDA), a key benchmark based on the value of the top 100 largest digital assets.

Market Momentum

After having a strong April, digital currencies enjoyed contained gains, pushing higher as strong sentiment drove the market’s activity. However, the market peaked at around May 6, and several cryptocurrencies started posting significant losses after this time frame.

In a nutshell, the entire cryptocurrency ecosystem has been “moving in one direction for the past few months,” as cryptocurrency trader Marius Rupsys put it. May’s early days were merely a continuation of April’s “bounce up, which faded quite soon.”

Iqbal Gandham, eToro’s UK Managing Director, offered a similar point of view, stating that:

“The May trend started way back in April, if you have a look at the charts. It peaked around the first week of May. It seemed to be aligned with the overall yearly chart, forming a wedge pattern.”

Iqbal Gandham

While many various top cryptocurrencies followed each other during the month, their paths were not all the same.

Bitcoin

Bitcoin, for example, rose modestly during the start of the month, climbing 10.8 percent between May 1 and May 6 from $8,958.94 to $9,928.39, CryptoCompare data reveals. The world’s biggest cryptocurrency by market capitalization then proceeded to suffer moderate losses, finishing the month at $7,502.45, down 16.3 percent from the start of May and 24.4 percent from its monthly high.

Analysts cited a handful of developments as potentially pushing bitcoin higher this month. Goldman Sachs, for example, revealed plans to create a BTC trading desk, as reported by CryptoGlobe.

Just a few days later, it was reported that Intercontinental Exchange Inc., which owns and operates the New York Stock Exchange, has been developing a platform that will allow market participants to place bets on bitcoin.

Gandham emphasized the positive impact of such developments, stating that “with Goldman and other institutions (Nomura) making positive noises and institutional money waiting for clarity prior to moving in, the news is starting to look good.”

Ether

Ether, the second-largest digital currency by market capitalization, experienced a more robust gain during the start of the month, rising 28.6 percent between May 1 and 5, according to CryptoCompare figures. During this time, the cryptocurrency climbed from $640.64 to $823.78.

By the end of the month, ether plunged to $572.51, having fallen more than 30 percent from its monthly high. Several analysts spoke of regulatory concerns, emphasizing that recent developments pressured this particular altcoin.

Coin IRA CEO Trevor Gerszt noted that “recent efforts by the SEC, CFTC, and state regulators with regard to ICOs have Ethereum investors nervous, as Ethereum could still end up being regulated as a security.”

Jeff Koyen, president of 360 Blockchain USA, also weighed in on the situation.

“For several weeks — and until recently — ETH was facing downward pressure over regulatory fears,” he stated.

“There were quite a few shots over the bow, so to speak, that suggested tokens would be the SEC's first clampdown targets. That may still happen. The SEC and other U.S. agencies haven't said very much lately about their plans to categorize and regulate crypto. But imminent threats to tokens have quieted, leading to Ether's rebound.”

Jeff Koyen

Bitcoin Cash

Bitcoin Cash had a volatile May, surging more than 37 percent from $1,293.17 to $1,779.58 between May 1 and 6, before plunging more than 40 percent to $993.87 over the next three weeks.

The cryptocurrency’s price was credited with receiving tailwinds from a May 15 hard fork, which increased its block size from 8 to 32 MB, while adding several technical upgrades.

Further, it was announced later on that Bitcoin Cash miners held a meeting where they discussed a proposal to give developers a portion of their mining rewards, in order to spur the network’s growth.

EOS

EOS, a cryptocurrency linked to an innovative platform for developing decentralized applications (Dapps), saw a brief rally early in the month, climbing nearly 15 percent from $16.99 to $19.51 between May 1 and 2, before experience a sharp decline. By the end of the month, it had fallen nearly 40 percent to $12.22.

Technologists, developers and market observers have been looking forward to the launch of EOS’s mainnet, which is set to take place on June 2.

Mati Greenspan, a senior market analyst at eToro, stated:

 

“The launch of the mainnet is a really big deal. Nobody really knows exactly what's going to happen but it's definitely gonna be big.”

Mati Greenspan

IOTA

IOTA, a cryptocurrency that powers a blockless distributed ledger called Tangle, spiked early in May, climbing more than 40 percent from $1.84 to $2.59 between May 1 and 3.

This sharp climb coincided with numerous positive developments, including an announcement that the IOTA Ecosystem went live. The digital currency experienced a downward trend from there, before enjoying a brief rally near the end of the month as IOTA benefited from the beta release of its Trinity Mobile wallet.

By the end of May, IOTA was trading at $1.74, down more than 30 percent from its intra-month high.

Crypto Market’s Next Steps

While the cryptocurrency ecosystem can be highly unpredictable, a handful of analysts gave their two cents on how these cryptocurrencies will behave going forward. In the near-term, these will continue to fluctuate based on changes in sentiment, said Gerszt. He added:

“Positive news about light future regulation and new businesses entering Bitcoin and Ethereum trading will push prices upward, while regulatory investigations and allegations of fraud will push prices down.”

Trevor Gerszt

Rupsys also emphasized the key role played by regulatory uncertainty, stating that the market needs to “get some clarity on the regulation side,” at which point “we might see more positive moves.”

Russian Mining Company Looking to Mine 20% of Remaining Bitcoin

Michael LaVere
  • Russian Mining Company (RMC), led by CEO Dmitry Marinichev, is planning to create a new mining farm.
  • RMC believes it will be capable of taking over 20% of the market share for mining. 

A Russian government official has plans to open a new crypto mining center with the goal of cornering 20% of the market for bitcoin. 

Dmitry Marinichev, Russian presidential internet ombudsman and CEO of the Russian Mining Company (RMC), has plans to repurpose an abandoned metal factory for crypto mining. 

Speaking in an interview with Russian financial news outlet RBC, the CEO explained that the factory, located in the northern province of Karelia, was closed in 2018 due to U.S. sanctions. Marinichev and the RMC have plans to convert the space into a crypto mining farm which could potentially account for 20% of the cryptocurrency mining market. 

Marinichev told RBC,

Our idea consists of converting the factory and selling its computer power as a service, that is to say, offering IT services.

Marinichev, despite his position with the Russian government, has been critical of its handling of technological innovation. In May 2018, the ombudsman criticized the government’s attempt to block messaging service Telegram, saying, 

It is impossible to block it by blacklisting IP-addresses. That way, the battle will go on endlessly, even if you consider that Telegram’s client part is open-source software whose inner workings can be analysed and comprehended.

Marinichev was responsible for Russian Mining Company’s $43 million initial coin offering in 2017, which remains Russian’s largest ICO to date. 

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